Workplace Visions
®
A Publication of the Society for Human Resource Management
Issue 4 | 2012
The Generation Gap: Will Millennials’
economic, education and career
development gaps create a future
leadership deficit?
The Millennials are here
For years HR professionals and business
pundits have been talking about the
Millennial generation’s future impact
on the workplace. But that future is
now our present. Not only have the
Millennials started to take their place
working alongside other generations in
businesses and organizations across the
U.S. and the world, a few are already
among the most high-profi le and
influential business leaders. The issues
that influence Millennials in their early
years on the job will have a ripple effect
across the economy and implications for
leadership development—if for no other
reason than the size of this generation,
the largest generation in U.S. history.
Globally, young people are
increasingly aware of their role as
tomorrow’s leaders, and many have
already had a major impact as leaders—
in social movements around the world,
new businesses, the sciences and the arts.
Businesses and HR professionals focused
on developing leaders for tomorrow
are increasingly aware of the numerous
factors—demographic, economic, social
and political—that could influence
the Millennial generation’s ability to
move into leadership roles in their
organizations. Many are using this
information to tailor their leadership
development strategies and programs.
But this task is not always easy because
the Millennial generation faces a series of
unique challenges.
The jobs and earnings gap
Beginning with demographics, the main
influencer of this generation is its sheer
size. While there is no precise agreement
on when the Millennial generation begins
or ends, for those who count individuals
born between 1978 and 2000 as part
of this generation, the numbers add up
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to approximately 95 million people, compared to only
78 million Baby Boomers. In addition, this young
generation fi nds its counterpart in countries all across
the world—many where young people represent an even
greater share of their nations’ population. According
to the U.S. Census, Millennials represent 27.7% of the
U.S. population, surpassing the Baby Boomers (26.4%)
and far outnumbering Generation X (19.8%), as shown
in Figure 1.1 Similar to the Baby Boomers, the large
numbers of Millennials have meant that for many in this
generation competition for a limited number of spaces
has often been fierce throughout their lives—whether it
was for college, athletic teams or internships. Another
key demographic characteristic of the Millennials is that
they are more racially diverse than other generations.
Economically, this generation also stands out.
According to the Pew Research Center’s analysis on
the wealth gap today between younger and older
Americans, the median net worth of households headed
by someone 65 or older is $170,494, which is 42%
higher than it was in 1984. In contrast, the median net
worth for younger-age households is $3,662, down 68%
from 25 years earlier.2 Several challenging economic
factors of the past decade have had a disproportionately
larger impact on young people. Very high levels of youth
unemployment have been standard in the post-recession
economies of countries around the globe. The youth
unemployment rate in the OECD area in March 2012
was 17.1%, rising to more than 50% in countries such as
Spain and Greece.3 High levels of youth unemployment
act as a global economic and political/social force.
Youth unemployment, for example, was seen as a major
factor in the development of the Arab Spring protests
that have had such a significant global political impact.
Figure 1: 2010 Census Generation Size
27.7%
26.4%
19.8%
13%
Mature/World
War II Generation
Baby
Boomers
Source: U.S. Census Bureau
2
Generation X
Generation Y/
Millennials
Skills and education gaps
Starting their working life in the tough economic
conditions of the past five years may be giving many
Millennials a more future-focused orientation, yet it may
also be a fi nancial liability they must carry for years to
come. New graduates have had to accept lower starting
salaries than they would have been offered in a stronger
economy, and these starting salaries can influence wages
for many years into the future. Other recent graduates
may fi nd themselves working part time or in jobs for
which they are overqualified, and this trend could also
have a longer-term impact on their career trajectory.
Those who are unemployed have the greatest challenge in
fi nding their footing in the labor market and beginning
to move up a career ladder. All of these factors are
emphasizing the need to get educated and trained for
the jobs that are available and the jobs that have the best
future prospects.
Unfortunately, obtaining this education is a growing
challenge for many of today’s young people, either due
to a lack of college- or career- readiness coming out of
high school (or a lack of a high school degree altogether)
or due to rising higher education costs. A 2012 Pew
Research Center survey found that “most young workers
say they don’t have the education and training to get
ahead. Among 18- to 34-year-olds who are employed,
less than half (46%) say they have the education and
training necessary to get ahead in their job or career.
Among those who are not working, only 27% say they
are adequately prepared for the kind of job they want.”
A major factor in how young people responded to this
question was whether they had a college degree; 69%
of young working college graduates said they have the
education and training they need to get ahead, compared
with only 39% of those without a degree and not enrolled
in college.4
Yet the need for higher levels of education to succeed
will be even more critical for this generation than for
any other. An October 2012 SHRM/Achieve survey on
changing employee skills and education requirements
found that the greatest changes HR professionals expect
in the years ahead are an increased number of jobs with
specific technical requirements (60%), increased staff
size (55%) and higher education level requirements
for most jobs (50%). More than one-half (55%) of HR
professionals anticipate increased demand for candidates
with a bachelor’s degree, and 41% expect an increased
need for advanced degrees (e.g., master’s, MBA, Ph.D.,
M.D., J.D.), as shown in Figure 2.5 The survey found
that across job levels and industries the needed education
Figure 2: Anticipated Need for Higher Education Levels
Do you anticipate that your organization’s needs for employees at the following education levels will increase, stay the same or decrease
over the next three to five years?
16%
High school diploma or equivalent
only (n = 3,386)
Specific postsecondary
certificate/credential(s) only
(n = 3,290)
32%
Advanced degree (e.g., master’s, MBA,
Ph.D., M.D., J.D.)
(n = 3,338)
62%
5%
25%
Associate’s degree
(n = 3,275)
Bachelor’s degree
(n = 3,409)
68%
16%
67%
7%
55%
43%
2%
Increase
Stay the same
41%
Decrease
56%
3%
Note: Percentages may not total 100% due to rounding.
Source: SHRM/Achieve Survey: Changing Employee Skills and Education Requirements—Changes in the Workforce
requirements are set to rise by at least one degree level
over the next three to five years. The fi ndings suggest
that for Millennials it will be absolutely crucial to obtain
higher education levels in order to fi nd and keep jobs,
much more so than for previous generations.
A career development gap
Millennials appear to recognize how much their futures
depend on skills and education, as they are the besteducated generation in America’s history. The rise of
the cost of education also means they have spent more
on obtaining their education than any other generation.
Those without the education necessary for the jobs
they want will be increasingly focused on how they can
attain it, while those who do have in-demand skills and
education may be more focused on getting the highest
return on their education investment dollars through
more and better career opportunities. As employees,
both categories are likely to look favorably on employers
that provide them with the chance to use their skills and
experience and to further develop their skills through
training and education. The SHRM 2012 Employee Job
Satisfaction and Engagement survey report found that
employees in the Millennial demographic—like all other
age groups—rated “opportunities to use skills/abilities at
work” as their number one job satisfaction factor (60%).
They also rated career advancement opportunities highly
as a job satisfaction factor (50%), as shown in Table 1.
However, many high-achieving young employees seem
to be getting restless. A study led by Monika Hamori
at IE Business School in Madrid recently profi led in
the Harvard Business Review found that “young high
achievers—30 years old, on average, and with strong
academic records, degrees from elite institutions, and
Table 1: Top Five Very Important Aspects of Job Satisfaction by Employee Age
Millennials
Generation X
Baby
Boomers
Veterans
First
Second
Third
Fourth
Fifth
Opportunities to use
skills/abilities
Compensation/pay,
job security, the
work itself
Communication between
employees and senior
management
Relationship with
immediate supervisor
Career advancement
opportunities
60%
57%
52%
51%
50%
Opportunities to use
skills/abilities, job
security
Compensation/pay
Communication between
employees and senior
management
Relationship with
immediate supervisor
Organization’s financial
stability
67%
64%
61%
57%
55%
Organization’s financial
stability
Opportunities to use
skills/abilities
Job security
Compensation/pay
Communication between
employees and senior
management
63%
61%
60%
59%
56%
Opportunities to use
skills/abilities, the work
itself
Organization’s
financial stability,
benefits
Compensation/pay
Relationship with
immediate supervisor, job
specific training
Flexibility to balance life
and work issues
56%
50%
47%
44%
40%
Note: Table represents those who answered “very important.” Percentages are based on a scale where 1 = “very unimportant” and 4 = “very important.”
Source: 2012 Employee Job Satisfaction and Engagement: A Research Report by SHRM
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international internship experience—are antsy. . . They
left their companies, on average, after 28 months.” The
researchers found that the “dissatisfaction with some
employee-development efforts appears to fuel many early
exits.” They believe that the problem of the high cost of
training that can take employees off the job for periods
of time may be creating a “vicious circle: companies
won’t train workers because they might leave, and
workers leave because they don’t get training.”6
A future leadership gap?
The above factors—high levels of un- and underemployment in their early years in the workforce, a skills
and education gap that may result in a failure to meet
the requirements of future jobs, and a lack of investment
in training that compels promising young managers to
embark on a constant search for new opportunities—
have the potential to converge to create a real problem
for many organizations’ efforts to build a pipeline of
future leaders. While a lack of investment in training
and education for younger workers raises the risk that
the most promising young employees may not stick
around long enough to become organizational leaders,
it may also have another outcome: a reluctance among
Millennial employees to take on the leadership roles
they are offered.
According to generational expert and founder of
RainmakerThinking Inc. Bruce Tulgan, “The problem
is—especially among the best Gen Y technical talent—
that there are a lot of people who are committed to their
work and career but are reluctant to take on supervisory
roles. Why? The main reason, according to our research,
is that they can see with their own eyes the experience
of their own managers and their slightly more advanced
peers. What they see is that managers, especially
new managers, are often given loads of additional
responsibility with very little additional support.”
What does this support look like? Along with
investments in training and education for promising
young employees, Tulgan advises organizations to
“surround them with teaching-style managers, advisers,
organizational supporters and maybe even mentors.”
These kinds of career development interventions help
young employees develop both technical and applied,
nontechnical skills, all of which are critically important
for future success in leadership roles.
As Millennials come to dominate the workplace, the
organizations that have made an effort to consider this
generation’s distinctive challenges and tailor their career
and leadership development programs accordingly will
4
see a return on that investment through more engaged
young employees and an improved pipeline of dedicated
future organizational leaders.
Resources
1.United States Census Bureau. (2011.) 2010 Census Briefs – Age and
Sex Composition: 2010. Retrieved on October 16, 2012, from www.
census.gov/prod/cen2010/briefs/c2010br-03.pdf.
2.Fry, R., Cohn, D., Livingston, G., & Taylor, P. (2011, November 7).
The Rising Age Gap in Economic Well-Being: The Old Prosper Relative
to the Young. Pew Research Center. Retrieved on October 12, 2012,
from www.pewsocialtrends.org/2011/11/07/the-rising-age-gap-ineconomic-well-being.
3.Organisation for Economic Cooperation and Development. (2012,
May 15). G20 Labour Ministers must focus on young jobseekers.
Retrieved on October 12, 2012, from www.oecd.org/newsroom/
g20labourministersmustfocusonyoungjobseekers.htm.
4.Taylor, P., Parker, K, Kochhar, R., Fry, R., Funk, C., Patten, E., &
Motel, S. (2012, February 9). Young, Underemployed and Optimistic:
Coming of Age, Slowly, in a Tough Economy. Pew Research Center.
Retrieved on October 16, 2012, from www.pewsocialtrends.org/
files/2012/02/young-underemployed-and-optimistic.pdf.
5.Society for Human Resource Management/Achieve. (October 2012).
Changing Employee Skills and Education Requirements—Changes in
the Workforce. Retrieved on October 16, 2012, from www.shrm.org/
Research/SurveyFindings/Articles/Pages/SHRM-Achieve-FutureChanges-Workforce.aspx.
6.Hamori, M., Cao, J., & Koyuncu, B. (2012, July-August). Why top
young managers are in a nonstop job hunt. Harvard Business Review.
Project Team
Project lead:Jennifer Schramm, M. Phil., GPHR,
manager, Workplace Trends and
Forecasting
Project contributors: Mark Schmit, Ph.D., SPHR, VP, Research
Copy editing:
Katya Scanlan, copy editor
Design:
Jihee Lombardi, senior design specialist
This report is published by the Society for Human Resource
Management (SHRM). All content is for informational purposes
only and is not to be construed as a guaranteed outcome. The
Society for Human Resource Management cannot accept
responsibility for any errors or omissions or any liability resulting
from the use or misuse of any such information.
© 2012 Society for Human Resource Management. All rights
reserved.
This publication may not be reproduced, stored in a retrieval
system or transmitted in whole or in part, in any form or by any
means, electronic, mechanical, photocopying, recording or
otherwise, without the prior written permission of the Society for
Human Resource Management, 1800 Duke Street, Alexandria, VA
22314, USA.
For more information, please contact:
SHRM Research Department
1800 Duke Street, Alexandria, VA 22314, USA
Phone: (703) 548-3440 Fax: (703) 535-6432
Web: www.shrm.org/research
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